Explanation:
The concept of the Philips curve was given by A.W Philips. It states that economic growth is related to employment growth and inflation. In other words, as the economy expands, the more jobs will be created and unemployment will decline but the inflation will increase.
So there is a kind of trade-off between inflation and unemployment.
When the unemployment rate is lower than the natural rate of unemployment the inflation is higher than expected. There is an inverse relationship between unemployment and inflation which is indicated by a downward-sloping demand curve.
When unemployment will be higher or above the natural rate the actual inflation will be lower than expected.
___________ is the stage of new-product development that involves promoting a product to distributors, and developing advertising and sales campaigns in order to generate and maintain consumer interest.
Answer: Commercialization
Explanation:
The commercialization stage is the process in which the various types of new products and the services are developed in the market.
In the commercialization stage the new products are get launched and also promoted for increase the demand of the new products and services in the market.
The main key function of the commercialization stage is that achieve the various types of commercial success and also the customer support of the new products. It is mainly the process introduce the new products in the market.
Inventory managers at SYX Enterprises utilize an inventory coetrol system where materials are scheduled to arrive just as they are neoded on the production line. Thi is referred to as:
a restructuring.
b. force-feld control.
c. total quality management.
d. just-in-time inventory control.
e. none of these.
Answer:
d. just-in-time inventory control.
Explanation:
Just-in-time( JIT) inventory-management style is an approach where production materials are availed only when they are needed for the production process. The company does not hold any stocks in its stores. JIT keeps the cost of inventory management low as the company orders for what it needs at that moment.
Just-in-time seeks to increase efficiency by reducing wastage and damages associated with ordering and holding large quantities of stocks. JIT aligns customers orders with the production process. In other words, customers demand drives production.
The success of JIT depends on the management ability to forecast demand accurately and the availability of reliable suppliers.
In many countries, people hold money as a cushion against unexpected needs arising from a variety of potential scenarios (e.g., banking crises, natural disasters, health problems, unemployment, etc.) that are not usually covered by insurance markets. Explain the effect of such a behavior on the precautionary component of the demand for money.
Explanation:
precautionary demand for money is classified as money that are held to cover for unforeseen occurrence e.g, an accident or illness.
It should also be noted that: The amount of money held for such purposes is broadly dependent on the level of income and expenditure.
With more income the precautionary demand will increase because there are more likely to be surprises in the timing or magnitude of the correspondingly high expenditures
A higher rate of interest represents a higher opportunity cost of holding money for any reason, including the precautionary reason, and so leads to lower precautionary holdings.
At the point where actual inflation is equal to expected inflation
Answer: The short run Phillips curve intersects the long run Phillips curve.
Explanation: The Phillips curve states that unemployment and inflation have an inverse relationship. This means that they move in opposite directions, I.e. If inflation increases then unemployment decreases and vice versa.
In the graph attached the short run Phillips curve is L - shaped and shows the inverse relationship between both variables initially. The long run Phillips curve is a vertical line, and shows that unemployment rate remains steady regardless of inflation rate, in the long term. Where these 2 lines intersect is where actual inflation and expected inflation are the same.
Final answer:
Actual inflation matching expected inflation means that there is no change in purchasing power, as income increases cancel out price increases. This is exemplified by the hypothetical scenario in the Land of Funny Money. Real-world situations often differ because perfect anticipation of inflation is uncommon.
Explanation:
At the point where actual inflation is equal to expected inflation, economic agents' expected prices align with the actual prices in the market. If everyone anticipates inflation correctly, there will be no loss of purchasing power since the percentage increase in prices is equaled by a percentage increase in incomes. An intuitive example of this can be illustrated through the Land of Funny Money where overnight, a 20% increase occurred in all wages, prices, and monetary quantities. Though unexpected, this change had no economic impact because the relative value of goods did not change; hence individuals could purchase the same basket of goods as before.
The relation between inflation and economic outcomes also depends on the position of the economy. If the economy is operating at or near its potential GDP—reflected by an upward-sloping short-run aggregate supply (AS) in its steep range—inflationary pressures will be accompanied by low unemployment rates. In real-world cases, perfect inflation anticipation is rare and deviations can cause wealth redistributions or resource misallocations.
A market in which firms can enter and leave so easily that firms in the market face competition from potential entrants is a _______ market.
A. potential
B. cooperative
C. contestable
D. perfectly competitive
Answer:
The correct answer is option D.
Explanation:
A perfectly competitive market is a market structure where there is no limitation or restriction on entry and exit of firms in the market. All potential firms can easily enter the market and all existing firms can easily exit.
There are a large number of sellers in the market that sell homogenous products. Because of free entry and exit, these firms face competition from potential entrants. Since there is a large number of firms, these firms are price takers.
In 2019, Chaya Corporation, an accrual basis, calendar year taxpayer, provided services to clients and earned $25,000. The clients signed notes receivable to Chaya that have a fair market value of $22,000 at year-end. In addition, Chaya sold a 36-month service contract on June 1, 2019, and received payment in full of $12,000. Round any division to four decimal places and If required, round your final answer to the nearest dollar. How much income does Chaya report from these transactions in 2019?
Answer:
Accrual shows face amount as revenue
revenue = $25,000
(12,000) (7/36)= $2,333 (regognized in 2017)
Total income reported in 2017 = $27,333
The next year she would show the remainder of 12,000 from 26 month contract
For tax purposes, max of 2 year deferral for payment recieved in advance.
When Jane wanted to buy jewelry for her wedding, she decided to purchase it from a store that her mother patronized. She didn't spend any time looking for jewelry in other stores. All that mattered to her was the emotion associated with buying something closely associated with her childhood. Jane's decision is most likely based on:________
Hey! How are you? My name is Maria, 19 years old. Yesterday broke up with a guy, looking for casual sex.
Write me here and I will give you my phone number - *pofsex.com*
My nickname - Lovely
For accounting errors, which of the below sentences is true?
a.They represent intentional sabotage of controls.
b.They are problems caused by failures in systems, procedures, and policies.
c.They represent fraud and normally result in legal action being taken.
d.They are primarily caused by lack of training.
Answer:
The correct option is C
Explanation:
Accounting error is the type of error in the accounting which was not done intentionally but when spotted, the error need to be fixed immediately. And when there is no immediate solution for the error, an investigation is conducted in order to find out who caused the error.
The statement which is true is that they represent the fraud which usually result in the legal action to be taken.
In March, stockholders of Herbalife Nutrition approved a 3-for-2 stock split. After the split, how many shares of Herbalife stock will an investor have if she or he owned 400 shares before the split?
Final answer:
After the 3-for-2 stock split, an investor who owned 400 shares of Herbalife stock will have 600 shares.
Explanation:
In March, stockholders of Herbalife Nutrition approved a 3-for-2 stock split. A stock split occurs when a company increases the number of shares outstanding while proportionally reducing the price of each share. In this case, a 3-for-2 stock split means that for every 2 shares an investor owns, they will receive an additional 1 share.
So if an investor owned 400 shares before the split, they would receive 400/2 = 200 additional shares. Therefore, an investor would have a total of 400 + 200 = 600 shares after the stock split.
Final answer:
To determine the number of shares an investor would have after a 3-for-2 stock split, multiply the original number of shares by 1.5. In this case, an investor with 400 shares would end up with 600 shares after the split.
Explanation:
When a company like Herbalife Nutrition performs a 3-for-2 stock split, each shareholder receives an additional half share for each share they own. Therefore, for every two shares owned, the shareholder will have three shares after the split.
To calculate the new number of shares for an investor who owned 400 shares before the split, we use the following calculation:
Determine the ratio of the stock split which is 3-for-2, meaning that for every 2 shares, it becomes 3 shares.
Calculate the multiplier by dividing the number of new shares by the number of old shares (3 divided by 2 equals 1.5).
Multiply the original number of shares (400) by the multiplier (1.5) to find the new number of shares.
Therefore, 400 shares × 1.5 = 600 shares.
After the stock split, the investor will have 600 shares of Herbalife stock.
This is a graphic representation of the quantity producers are willing to produce at different prices.
Answer:
The correct answer is: supply curve.
Explanation:
The supply curve is the graphical representation of the supply of a product. The supply of a product can be defined as the quantity of goods or services that a producer is willing to produce at a given time.
The supply schedule shows the quantity the producers are willing to supply at different prices. Its graphical representation is the supply curve.
The supply curve is an upward sloping curve indicating a positive relationship between the price level and the quantity supplied.
Company A provides corn to Company B to make into corn syrup. Company B sells its corn syrup to Company C, who makes ice cream for sale at Company D. Company B is a ________ in the supply chain of ice cream.
Company A provides corn to Company B to make into corn syrup. Company B sells its corn syrup to Company C, who makes ice cream for sale at Company D. Company B is a "intermediary" in the supply chain of ice cream.
Company B is an intermediary or a middleman in the supply chain of ice cream. It plays a critical role as a processor or manufacturer of corn syrup, which is a key ingredient in ice cream production.
By receiving corn from Company A and transforming it into corn syrup, Company B bridges the gap between raw materials and the final product offered by Company C.
This seamless integration helps streamline the supply chain, ensuring a consistent and reliable flow of corn syrup to Company C (the ice cream maker), enabling Company D (the retailer or seller) to access and offer ice cream products to consumers.
To know more about supply chain here,
https://brainly.com/question/28165491
#SPJ2
Grouper Corp. retires its $640000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $663970. The entry to record the redemption will include a________
Answer:
Explanation:
The journal entry is shown below:
Bonds payable A/c Dr $640,000
Premium on bonds payable A/c Dr $23,970
Loss on bonds redemption A/c $8,030
To Cash A/c $672,000 ($640,000 × 1.05)
(Being the redemption of bond is recorded and the remaining balance is debited to the Loss on bonds redemption account)
The Premium on bonds payable is computed below:
= Carrying value of the bonds - face value of the bond
= $663,970 - $640,000
= $23,970
A statewide alliance of independent hospitals has formed in order to do group purchasing of medical supplies. Group purchasing allows the hospital alliance to negotiate lower prices with suppliers because of the large number of materials ordered. This is an example of the advantage of __________ resulting from an alliance.
a. explicit collusion.
b. distribution opportunities.
c. economies of scale.
d. opportunistic behavior.
Answer:
The correct answer is c. economies of scale.
Explanation:
The situation in which a company reduces its production expenses by expanding is called economy of scale. It is a situation in which the more it occurs, the cost that the company has to manufacture a product is lower.
There is a greater benefit for every extra unit we produce. This reduction in the cost of unit manufacturing is not reduced because the price of raw materials goes down, but to take advantage of a material that we have already bought and in which we invested money in the past.
Therefore, it occurs especially in situations in which the company buys more facilities. If we buy a machinery, the way to take advantage of it is to produce more since it is the way that we get a greater benefit, by taking advantage of the same machinery to produce more products, the unit cost of each product is lower. And we will get more benefit the more we produce. This benefit will be greater since we will not have to increase manufacturing costs since we have already had it before.
All of the following are tangible or intangible benefits of a new system except:
A. increased costs
B. increased job satisfaction
C. better decision making
D. greater management control
E. improved customer service
Answer:
A. increased costs
Explanation:
A new system should simplify tasks, improve the speed of delivery and make work more enjoyable. A business invests in a new system with the expectation of enhancing efficiency and reduction in wastage. Although a new system may be expensive to implement in the short-run, it has cost-saving benefits in the long-run.
Increased costs are not a benefit of a new system. Acquiring a new system is costly. To a business, increased costs are a disadvantage, not a benefit. The benefits of a new system outweigh its costs in the long-term.
Increased job satisfaction, better decision making , greater management control and improved customer service are benefits associated with new systems.
Which of the following depreciation methods allocates a varying amount of depreciation each year based on an asset's usage?A) the units-of-production methodC) the double-declining-balance methodB) the straight-line methodD) the annuity method
Answer:
Correct option is (A)
Explanation:
Depreciation is decrease in the value of asset over its useful life. Under, units of production depreciation method, an asset's value is estimated based in its usage or the the amount of units produced by it. During the initial years, asset performs better than later years. So, depreciation expense is higher during initial years and falls considerably during later years.
Depreciation expense or depreciation rate remains same for rest of the options like straight line method. double declining method and annuity method.
The units-of-production method is the depreciation method that allocates a varying amount of depreciation each year based on an asset's usage.
Explanation:The units-of-production method is the depreciation method that allocates a varying amount of depreciation each year based on an asset's usage.
Under this method, the asset's depreciation expense is determined by dividing the asset's cost minus its salvage value by the total estimated units of production over its useful life. The depreciation expense for each year is then calculated by multiplying the depreciation rate per unit of production by the number of units produced in that year.
This method is commonly used for assets that are expected to wear out or become obsolete based on their usage, such as manufacturing machinery or vehicles.
https://brainly.com/question/36468482
#SPJ3
______ are the three elements of expectancy theory.a.Expectancy,b.institution,c.and varianceExpectancy,d.institution,e.and valuesExpectancy,f.instrumentality,g.and varianceExpectancy,h.instrumentality,i.and valenceExpectancy,j.instrumentality,k.and values.
Answer: expectancy, instrumentality and valence
Explanation: These three elements can be explained as follows :-
1. Expectancy refers to the probability that the activity one is going to perform will eventually lead to good performance.
2. The belief that there is a connection between the activity be performed and the goal that is one willing to achieving is called instrumentality.
3. The degree to which the potential reward from success are valued is called valence.
Flux Corporation is a public company whose shares are traded in the public securities markets. Under the Sarbanes-Oxley Act of 2002, Flux is subject to the direct corporate governance requirements of:_______
a) any other public company with which flux exchanges shares
b) any state in which flux does business
c) the federal government.
d) the state in which flux incorporated
Answer:
The correct answer is C) the federal government.
Explanation:
The Sarbanes-Oxley Act, also known as SarOx or SOA, is the law that regulates accounting and auditing financial functions and severely penalizes corporate and white-collar crime. Due to the multiple frauds, administrative corruption, conflicts of interest, negligence and bad practice of some professionals and executives who, knowing the codes of ethics, succumbed to the attractiveness of making easy money and through companies and corporations deceiving partners , employees and interest groups, including their customers and suppliers.
The application and interpretation of this law has generated multiple controversies, one of which is extraterritoriality and international jurisdiction, which has created panic in the global financial system, especially in banks with correspondents in the United States and multinational companies listed on the stock exchange. New York stock.
Southwestern Foods Corporation operates a packaging plant near the border between the United States and Mexico. Due to the location, it would be easier for Southwestern to employ non-citizens. With respect to persons not authorized to work in the United States, an employer can:
Answer:
Southwestern Foods Corporation could employ non-citizens as long as they are authorized to work in the US (they have a work permit). Hiring non-citizens who also do not have a work permit is llegal under the Immigration Reform and Control Act of 1986.
Kirksand Airlines is well known for providing excellent customer service to its flyers. The staff members enquire and listen carefully to each flyer's wants and needs. If a flyer has any specific requests, the staff members ensure that they are immediately attended to. In this scenario, Kirksand Airlines has based its customer relationship management on the trend of _____.
A. technology
B. personalization
C. loyalty
D. mass marketing
Answer:
The correct answer is B. personalization.
Explanation:
At present, consumers no longer like the idea of being seen as simple numbers by brands and companies, this implies that those who seek to reach these individuals should work harder to change the way they relate and direct to this, and one of the most effective methods today is through personalization, which implies a better understanding of consumers to become more relevant to them. Salesforce notes that by 2021, 51 percent of consumers would be waiting for companies to anticipate their needs and make relevant suggestions before a contact is established.
Therefore, we can talk about personalization as an increasing tactic, which is being well perceived by businesses and consumers. Particularly in the case of business, the benefits have been significant, Monetate notes that 79 percent of organizations that exceed their revenue goals have a documented personalization strategy.
Q 11.31: Tabitha and Gerald are discussing common stock that they hold. Tabitha states that she purchased hers through the New York Stock Exchange, but Gerald says that he purchased his by investing in his brother-in-law’s company. What is the difference between the investments of Tabitha and Gerald?
Answer:
Tabitha's stocks are from a publicly held corporation but Gerald's is from a privately held corporation
Explanation:
The main difference between Tabitha's and Gerald's investment seems to be the fact that Tabitha's stocks are from a publicly held corporation but Gerald's is from a privately held corporation. Public held corporation's stocks/shares can be bought by anyone on a stock exchange. On the other hand Privately held corporation's stocks/shares are only sold by the company to a select few investors. Which Gerald managed to buy solely because it is his brother-in-law's company.
Suppose that McDonalds and Yum Brands are the sole producers of a quadruple-decker chicken and hamburger sandwich. The two firms currently charge the same price for their products. If neither firm reduces the price of its quadruple-decker chicken and hamburger sandwich, each firm earns $40 million in profit. If both firms reduce their prices, then each firm will earn $9 million in profit. If one firm reduces its price and the other does not, then the firm that reduces price will earn a profit of $70 million while the other firm will earn a profit of $2 million.
Assuming that collusion is not a possibility, the Nash equilibrium occurs when
Answer:
Both companies will reduce their prices.
Explanation:
Given that collusion is not possible between McDonald's and Yum, both companies will try to earn more money by reducing their prices and increasing their profits to $70 million. They will do this hoping that the other firm doesn't modify its pricing strategy.
Your client, Tom, asks you to prepare his financial statements. He is especially curious about his net worth. He asks you to explain to him his current net worth, and show you how it was calculated. Which financial statement or ratio will help you illustrate Tom's net worth?
a. Income Statement Balance
b. Sheet Statement of Net Worth
c. Net Worth to Total Assets Ratio
Answer: Balance sheet
Explanation: In simple words, balance sheet refers to the statement which is prepared by an entity at the end of the financial year for depicting its assets, liabilities and equity in hand at that particular point of time.
Balance sheet shows the net worth of an entity at the end of the year and can also be used to evaluate how much of the assets are funded with the capital and for how much any liability has been taken over.
Thus, from the above we can conclude that the correct answer is balance sheet.
The Balance Sheet, specifically the Statement of Net Worth, will help illustrate Tom's net worth by showing his assets, liabilities, and equity.
Explanation:To illustrate Tom's net worth, you would use the Balance Sheet, specifically the Statement of Net Worth. This statement shows the assets, liabilities, and equity of an individual or business at a specific point in time. It provides information on Tom's total assets and subtracts his liabilities to calculate his net worth.
The formula to calculate net worth is:
Net Worth = Total Assets - Total Liabilities
Therefore, the Sheet Statement of Net Worth will be the most helpful financial statement to explain and calculate Tom's net worth.
Learn more about Statement of Net Worth here:https://brainly.com/question/31885969
#SPJ12
Andrea purchased an auto insurance policy with bodily injury liability limits of 250/500 ($250,000/$500,000). She also purchased a personal umbrella policy with a $1 million limit and a $500 self-insured retention. Andrea was talking on her cell phone while driving, and her car struck and killed a pedestrian in a crosswalk. The court ordered her to pay $750,000 to the spouse of the person she killed. How will this claim be settled?
Answer:
Auto insurance policy with Bodily injury liability limits = 250/500
personal umbrella policy with a limit = $1 million
Self-insured retention = $500
Here, total claim = $750,000
Amount paid by the auto insurance policy = $250,000
Remaining = $750,000 - $250,000
= $500,000
Remaining claim amount of $500,000 shall be paid by the umbrella policy.
According to the model developed by Katz and Kochan, at which level does the management make basic choices such as whether to work with its unions or to devote its efforts to developing nonunion operations?A) Strategic levelB) Corporate levelC) Functional levelD) Production levelE) Business unit level
Answer: Option (A)
Explanation:
Here , from the given options we can state that option (A) is correct. Strategic level under the model which was put forth by Kochan and Katz tends to mostly consists of actions and decisions which are developed by both the unions and the management that are concerned about the values, strategies, structures, and several other features that further affect the bargaining and relations.
"When aggregate demand increases," A. the price level is likely to fall as GDP rises. B. aggregate supply will shift to the right. C. aggregate supply will shift to the left. D. the price level is likely to rise as GDP rises.
Answer:
D. the price level is likely to rise as GDP rises.
Explanation:
The aggregate demand measures all the goods produced in an economy at a given price in a particular period.
When the aggregate demand increases, the aggregate demand curve shifts to the right. When aggregate demand increases, aggregate demand exceeds aggregate supply and aggregate price and output would increase.
An increase in aggregate demand tends to cause a rise in both the price level and Gross Domestic Product (GDP). Therefore, the correct answer to the student's question would be option D.
Explanation:When aggregate demand increases, the price level is likely to rise as GDP rises. This happens because of the basic law of supply and demand. As demand for goods and services increases, companies can charge more for their products (thus increasing the price level). This simultaneously boosts Gross Domestic Product (GDP), as more goods and services are being sold. So, in this case, the correct answer would be option D.
In contrast, options A, B, and C do not necessarily follow from an increase in aggregate demand. Option A suggests the inverse relationship between the price level and GDP, which is generally incorrect. Options B and C are related to shifts in the aggregate supply, not demand.
Learn more about Aggregate Demand here:https://brainly.com/question/31452265
#SPJ3
Starbucks is using its purchasing power to continue its quest to reduce its energy usage. Recently, the company announced plans to replace all of the traditional incandescent and halogen bulbs in its stores worldwide with more efficient light-emitting diode (LED) bulbs—a move the company claims will enable it to cut energy consumption in its stores by up to 7 percent. Starbucks would be considered a leader in____________.
Answer:
Sustainable procurement
Explanation:
Sustainable procurement is a purchasing and venture process that. considers the financial, ecological and social effects of. the substance's spending. Feasible acquirement permits associations. to address their issues for products, administrations, development works and utilities.
The primary focus reasonable obtainment is to incorporate natural and social contemplations into the procurement procedure, with the objective of lessening antagonistic effects upon well being, social conditions and the earth, in this manner sparing significant expenses for open segment associations and the network on the loose.
Brian is a salesperson for a payroll processing company. He has found that a few of his prospects raise objections even when it is clear that the solution he is presenting will work and is worth the price. The prospects feel comfortable with their current payroll processing systems, andare hesitant to adopt the new technique proposed by Brian. In this scenario, which of the following is most likely a reason the prospects raise objections?a.The prospects lack information.b.The prospects fail to recognize a need.c.The prospects resist change.d.The prospects want to avoid the sales interview.
Answer:
c.The prospects resist change.
Explanation:
It is in this changing scenario that the the management shall be adaptive to change. It shall not resist to change. As for the growth of a company the company shall adapt to change required in order with the changing scenario of environment.
In the given case, Brian the salesperson has a good scheme of operating and that he has the knowledge of practical scenario about what a company needs to change and now apply for better performance.
But still the company do not accept the policy as it resists for change and also the policy is beneficial but its mere application might cost the company a lot, and the management might be lazy and also have shortage of funds.
On April 1, 2017, La Presa Company sells some equipment for $18,000. The original cost was $50,000, the estimated salvage value was $8,000, and the expected useful life was 6 years. On December 31, 2016, the Accumulated Depreciation account had a balance of $29,400. How much is the gain or loss on the sale?
Answer:
The loss on sales of equipment is : $850
Explanation:
Depreciation expenses per year for the equipment is: (Original cost - Salvage value ) / expected useful life = (50,000 - 8,000)/6 = 7,000
Depreciation expenses per month for the equipment is: Depreciation expenses per year for the equipment/12 = 7,000/12
3-month depreciation expenses for the equipment from December 31,2016 to 31st March 2017 = 3 x 7,000/12 =1,750
Accumulated depreciation as at April 1 2017 ( the time of equipment disposal) = Accumulated Depreciation account as at December 31st 2016 + 3-month depreciation expenses for the equipment from December 31,2016 to 31st March 2017 = 29,400 + 1,750 = 31,150
Net book value of the equipment = Original cost - Accumulated depreciation as at April 1 2017 = 50,000 - 31,150 = 18,850
Gain/ (loss) on equipment disposal = Selling price - Net book value of the equipment = 18,000 - 18,850 = $(850)
=> Thus, the loss on sales of equipment is $850.
Final answer:
To calculate the gain or loss on the sale of the equipment, subtract the book value from the selling price. In this case, the company has a gain of $4,400 on the sale.
Explanation:
To calculate the gain or loss on the sale of the equipment, we need to determine the book value of the equipment at the time of sale. The book value is the original cost minus accumulated depreciation.
On December 31, 2016, the Accumulated Depreciation account had a balance of $29,400.
The depreciation expense for one year can be calculated as (original cost - salvage value) / useful life.
In this case, it is ($50,000 - $8,000) / 6 = $7,000.
Therefore, the book value on April 1, 2017, is $50,000 - $29,400 - $7,000 = $13,600.
The gain or loss on the sale is the selling price minus the book value. In this case, it is $18,000 - $13,600 = $4,400.
Since the selling price is higher than the book value, the company has a gain of $4,400 on the sale.
Mr. Brown transferred property, which had an adjusted basis to him of $40,000 and a fair market value of $50,000, to Corporation B in exchange for 100% of B’s only class of stock and $15,000 cash. At the time of the transfer, the stock had a fair market value of $35,000. What is the amount of gain to be recognized by Mr. Brown?
Answer:
$0
Explanation:
The adjusted basis for any property or assets transferred to a corporation or a partnership in exchange for shares or property rights must be registered at fair market value.
In this case Mr. Brown transferred property with a fair market value of $50,000 and received in exchange stock worth $35,000 and $15,000 in cash. ($50,000 = $35,000 + $15,000)
market is in long-run equilibrium and firms in this market have identical cost structures. Suppose demand in this market decreases. Which of the following will happen to the market quantity as the market leaves and then returns to long-run equilibrium?
Answer:
There will be oversupply. Pressure will be exerted on price. Weak producers will leave. Supply will fall. Price will rise. A new long run equilibrium will be attained, albeit at a lower equilibrium quantity.
Explanation:
Change in demand or supply will cause the equilibrium position to change. Given a constant supply, a reduced demand would result in supply overshadowing demand. Identical cost structure means that the profit margin would be further reduced which would force weak players in the market to exit the market as well as reduce the incentive to produce more by the remaining players given the poor margin. As the producers exit the market, the market supply falls and price increases. Eventually, equilibrium price returns to its long run equilibrium but at a lower quantity of transaction in the market.